Good day everyone, and welcome to today's ANI Pharmaceuticals Inc. Fourth Quarter 2023 Earnings Results Call. At this time, all participants are in a listen-only mode. Later you will have the opportunity to ask questions during the question-and-answer session. [Operator Instructions] Please note this call is being recorded. [Operator Instructions]. It is now my pleasure to turn the conference over to Judy DiClemente, Investor Relations for ANI Pharmaceuticals.

Thank you, Angela. Welcome to ANI Pharmaceuticals’ Q4 2023 earnings call. This is Judy DiClemente of Insight Communications Investor Relations for ANI. With me on today's call, are Nikhil Lalwani, President and Chief Executive Officer and Stephen Carey, Chief Financial Officer. You can also access the webcast of this call to the Investor section of the ANI website at www.anipharmaceuticals.com. Before we get started, I would like to remind everyone that any statements made on today's conference call that express a belief expectation projections, forecast anticipation or intent regarding future events and the company's future performance may be considered forward-looking statements as defined by the Private Securities Litigation Reform Act. The forward-looking statements are based on information available to ANI Pharmaceuticals’ management as of today, and involve risks and uncertainties including those noted in our press release issued this morning and our filings with the SEC. Such forward-looking statements are not guarantees of future performance. Actual results may differ materially from those projected in the forward-looking statements. ANI specifically disclaims any intent or obligation to update these forward-looking statements, except as required by law. The archived webcast will be available on our website www.anipharmaceuticals.com. For the benefit of those who may be listening to the replay or archived webcast, this call was held and recorded on February 29, 2024. Since then, ANI may have made announcements related to the topics discussed. So please reference the company's most recent press releases and SEC filings. And with that, I'll turn the call over to Nikhil Lalwani, Nikhil.

Thank you, Judy. Good morning, everyone. Thank you for your interest in the ANI Pharmaceuticals, and for joining our fourth quarter earnings call. First, I want to thank our customers, suppliers, partners, investors and the entire ANI team for their collaboration and significant contributions in delivering on our company's purpose of serving patients, improving lives. A strong fourth quarter tapped off a record year and we finished 2023 with $486.8 million in total revenue, an increase of 54% over 2022. Adjusted non-GAAP EBITDA was a record $133.8 million, up 140% year-over-year, and adjusted non-GAAP earnings per share for $4.71, an increase of 246% from 2022. Total revenues for the fourth quarter were $131.7 million, an increase of 40% over the fourth quarter of 2022. Our lead rare disease assets, Purified Cortrophin Gel generated $41.7 million in this quarter, a year-over-year increase of 137% and a sequential increase of 40% from Q3. For the full year, Cortrophin generated sales of $112.1 million representing year-over-year growth of 169%. I continue to be tremendously pleased by the effort and output of our Rare Disease team in building our Cortrophin Gel franchise. New patient starts accelerated during Q4, with the strongest sequential quarter over quarter growth in revenue to date. In addition to record new cases initiated and new patient starts, we saw a significant number of first time ACTH users as well as the return of APPs, who had not prescribed ACTH for several years. Our world class rare disease sales and marketing team continues to grow the overall ACTH market and overall awareness of ACTH treatment in the U.S. for appropriate patients. Total ACTH unit volume was up 15% in 2023, compared to 2022 according to IQUVIA. While the number of patients being treated with ACTH therapy in the U.S., is significantly…

Thank you, Nikhil. Good morning to everyone on the call. We posted another strong quarter to close out 2023 with fourth quarter revenues of $131.7 million up to 40%, over the prior year period. Revenues from Cortrophin Gel reported in our Rare Disease segment was $41.7 million, up 137% from the prior year, and 40% from the third quarter driven by increased volume. Fourth quarter revenues in our generic established brands and other segments were $89.9 million, an increase of 17% over the prior year period. Within this segment, generic revenues for the quarter were $71.8 million, an increase of 24% over the prior year period, and 2% over the third quarter, driven by increased volumes in the base business and contributions for new products launched in both 2022 and 2023. To continue with this segment, net revenues for established brands and other revenues were $18.1 million in the quarter, a decrease of 3% from the prior year period driven by lower volume. The performance was in line with our expectations as described on the third quarter earnings call, when we noted that the market conditions for specific molecules had recently changed. Cost of sales, excluding depreciation and amortization, increased 47% to $53.4 million in the fourth quarter of 2023, compared to the prior year period, primarily due to significant growth in sales volumes of both generic and rare disease pharmaceutical products. Non-GAAP gross margin was 59.6%, a decrease of approximately 200 basis points versus the prior year, primarily due to unfavorable product mix. Research and development expenses increased 89% to $9.9 million in the fourth quarter of 2023, primarily due to a higher level of activity associated with ongoing and new products. Selling, general and administrative expenses increased by 34% to $44.5 million in the fourth quarter of 2023,…

[Operator Instructions] We'll take our first question from Gary Nachman with Raymond James.

Hi, guys. Good morning. And congrats on all the progress. First on Cortrophin, the 2024 guidance. Just how much market growth are you assuming versus share gains from Axa [ph]? And any changes in net price anticipated over the course of the year? And what therapeutic areas you think should be the biggest contributors? I guess, looking out into this year since the guidance look pretty solid. And then just in terms of looking at additional rare disease assets. Just talk about the market, Nikhil, and how many different opportunities you're looking at currently? Are they mostly in your current therapeutic areas? I know you're willing to consider assets outside those therapeutic areas as well? And then just in terms of size, how big are they? And are you confident you can get a deal done sometime this year? Thanks.

Yeah. Thank you, Gary. Thank you for your question, and good morning. To your first question on Cortrophin Gel guidance in 2024, the overall category outlook remains robust. A number of patients being treated with ACTH treatments of course, for appropriate patients is significantly lower than where it was a few years ago. So the outlook for the category remains robust. And as you've seen, there we have had seven quarters consecutively of quarter-on-quarter year-over-year growth in the number of units. So the growth opportunities in the category as a whole is significant. Second, your question on price. We try to find a balance between sharing information that assists the investment community while not giving away competitively sensitive data, but publicly, you will see that both our competitor, and we took a 3% price increase on January 1, 2023. And then third part of your question on Cortrophin was around the therapeutic areas. And look, we see strength in both the therapy that we initially launched with nephrology, neurology, and rheumatology as well as the newer therapeutic areas that we have begun investing in, which is pulmonology, ophthalmology and gout. And we see momentum. Ophthalmology is clearly new, but we've seen momentum across these therapeutic areas. We have, as reported, a record number of new patient starts and new cases initiated in the fourth quarter of 2023. We see that momentum continuing in the first quarter and throughout 2024. And we also have seen growth across these therapeutic areas. So no one therapeutic area to sort of point out. The second question was M&A. We are – we have been looking for assets for some period of time. We are -- again, trying to find a balance between sharing information that’s helpful to the investment community, while not pave away sensitive data, in this case, to the companies that we're engaged with. But there are companies that we're engaged with and multiple ones. And they are both ones that they are aligned with our current priority therapeutic areas as well as ones -- and therefore, leveraging our sales force and ones that are outside of our therapeutic areas but leverage the rest of our Rare Disease platform. And of course, as I mentioned earlier, expanding the scope and scale of our Rare Disease business through BD and M&A remains a high priority for the company. Thank you, Gary.

Great. Thank you so much.

The next question comes from Vamil Divan with Guggenheim Securities.

Hi, this is Daniel on for Vamil. Thanks for taking my question. So based on our analysis of script trends for the fourth quarter, the control on sales were maybe a bit stronger than we had originally anticipated. So like what do you think is maybe the main driver of this? Are there any particular channels that aren't captured in IQVIA or is it more like a pricing dynamic with improvements seen in net price? And then a second question is more on the expense side. So I appreciate your overall commentary on what you maybe expect in 2024, but maybe you can give a little more detail on the right down between like SG&A and R&D going forward? Like how do you expect the growth in the more growth in one versus the other? Anything there would be helpful. Thank you.

Yeah. Thank you, Daniel, and thank you for joining the call. Look, in your question in -- on Q4 Cortrophin performance versus what the IQVIA data is showing, look, for us, revenues trended ahead and will continue to trend ahead due to increased volumes. Key factors driving these are further increase in effectiveness of our existing sales force, the record number of new patient starts and continued growth across specialties we targeted since launch and the new areas such as pulmonology, gout and now ophthalmology. And then to your second question regarding expenses. We will continue to invest in key growth initiatives in 2024. And as Steve had mentioned, expect total operating expenses to essentially grow in line with the revenue growth and below the 2023 expense growth. And what's contemplated in our guidance is investment in R&D to fuel the Generics growth, right? Our Generics business is larger, so we're investing to continue fueling the generics growth through new product launches, right, to be able to deliver the high-single digits, low double digit growth on the Generics business. And we've also talked about increased spend in -- on the Cortrophin side to expand that franchise, the Cortrophin Gel franchise, where we are adding sales team members and marketing and sales efforts in our newer specialty areas of pulmonology, ophthalmology and gout. We're further strengthening the patient support and operations to support the future growth, and there's also modest R&D spending for Cortrophin on collaboration with top physicians and scientists to better delineate Cortrophin Gel’s activity and mechanism of action and help guide treatment decisions as well as to better support the patient journey and enhance the convenience as well as remove pain points for patients starting on ACTH. You also asked about, look, what's the specific, what -- is it more in one area versus another? I think we're investing in both, right? The Cortrophin related initiatives as well as the additional R&D spend to support the Generics business. Thank you, Daniel.

Hey, great. Thank you.

The next question comes from Les Sulewski with Truist Securities.

Hi. This is Jeremy on for Les. Regarding market normalization, what issues are mostly resolved or likely to be resolved this year versus what might still linger? And then also, just any color -- more color on the progress in pulmonology from the sales force expansion and any early launch metrics on the 1 milliliter dose? Thanks.

Good morning, and thank you, Jeremy. Thank you for joining our call. I think you asked three questions. One was on pulmonology. So on pulmonology, as we had mentioned, we have seen traction, increased number of new patient starts, increased number of new cases initiated and positive physician response seeing the momentum that we have from the first region, right? We had added a smaller sales force in the second quarter of 2023. We're adding a second geographical region in pulmonology. So we are seeing the traction there and are investing to continue increasing the awareness in the pulmonology facility. You also asked about the 1-ml vial in the gout therapeutic area. Look, we are optimistic about the potential for Cortrophin Gel for this indication. However, it is early in the launch, and we look forward to sharing updates in the future. As far as market resolutions and overall market dynamics, the overall macro trend of supply-related tailwind continues. Having said that, what is contemplated in our guidance is for Generics. We have not contemplated any additional benefits from the supply tailwinds and for established brands. We have not contemplated additional tailwinds beyond what we're already seeing in the first quarter of 2024.

Thank you.

Thank you, Jeremy.

It appears we have no further questions at this time. I will now turn the program back over to Nikhil Lalwani for any additional or closing remarks.

Yeah. Thank you, everybody. Thank you for – again, for spending time with us and for joining our call this morning and supporting the ANI team as we work to fulfill our purpose of Serving Patients, Improving Lives. We look forward to keeping you updated during the year ahead. Thank you.

This does conclude today's program. Thank you for your participation. You may disconnect at any time.